Building doom: 400 businesses at risk

QUEENSLAND'S construction industry continues to face tough times with insolvency experts claiming more than 400 are at risk of going broke.

SV Partners said today that more than 430 Queensland businesses in the industry are at high to severe risk of insolvency according to the firm's analysis of commercial data.

This represents a 10 per cent increase over the past year.

Plumbers, electricians, carpenters and residential builders are at most risk of financial collapse in the next 12 months.

SV Partners executive director David Stimpson said smaller construction companies were set to suffer from a forecast downturn in residential construction and were unlikely to benefit from the influx of commercial projects such as Cross River Rail and Queen's Wharf.

"Construction companies need to be vigilant in managing their cash flows to ensure they are able to withstand low ebbs in the construction business cycle," said Mr Stimpson.

"Contractors in the finishing trades are often the first to feel the strain in the industry as they usually last to be paid."

Queensland's construction watchdog last year announced a crackdown on builders who are operating beyond their financial capacity.

Queensland Building and Construction Commission said more than 200 builders around the state would be required to prove they have the assets and financial capacity to handle the work that they agree to undertake.

Public Works and Housing Minister Mick De Brenni also has introduced new powers for the QBCC that will ensure builders face jail time or hefty fines for financial malfeasance, including not paying money earmarked for subbies into special trust accounts.

QBCC inspectors will be given powers to seize documents and property from building companies suspected of financial irregularity under the reforms introduced into State Parliament.

The new laws follow a string of construction companies that have collapsed in recent years owing subbies hundreds of millions of dollars.

SV Partners Mr Stimpson said businesses needed to take a critical look at their operations and financial strategies to cope with changing conditions, such as tightening competition or a drop in demand.